Taxable Talk

It’s one thing to hide a few dollars. It’s quite another to hide a few million dollars. The IRS’s assault on UBS, the Swiss bank, has reaped some more indictments. This time, three individuals involved in venture capital are alleged to have hidden away millions of dollars and a golf course in Colorado through secret Swiss accounts.

Stephen M. Kerr and Michael Quiel were Phoenix businessmen; among their businesses were two venture capital firms. The goal of such firms is to invest in start-up companies, and hope to take a few “public” (on stock exchanges) and reap large rewards. If the Department of Justice is correct, Mr. Kerr and Mr. Quiel had an additional method of making money.

They are alleged to have partnered with a former San Diego attorney, Christopher Rusch, to have used UBS to hide money and control of corporations. From the Department of Justice press release:

Beginning in or before 2004, and continuing through at least December 2007, Kerr and Quiel obtained control of shares of stock of publicly traded domestic companies in a way that concealed their ownership of the stock. Kerr and Quiel then deposited the stock, or proceeds from the sale of the stock, to multiple undeclared bank accounts set up with the assistance of Rusch at UBS in Switzerland and at another Swiss bank. These accounts were all held in the names of nominee entities to further conceal Kerr’s and Quiel’s ownership. Kerr and Quiel also used the accounts to conceal income earned from the subsequent sale of this stock from the IRS. In 2007, the combined total net assets in Kerr’s accounts exceeded $5.6 million and Quiel’s accounts exceeded $2.6 million. Rusch maintained signature authority over the secret accounts and, with the assistance of a Swiss account manager and financial intermediary, facilitated transactions on behalf of Kerr and Quiel.

Mr. Rusch is also accused of having his own secret offshore accounts at UBS and a bank in Panama. It appears Mr. Rusch’s website is still active. The indictment was handed down in early December but was not released until the three were in custody (today). It probably wasn’t difficult for the DOJ to find Mr. Rusch; a quick Google search noted that he resided in Panama part-time as of 2010. I find it interesting to note that Mr. Rusch was a tax attorney.

In any case, the three are accused of conspiracy, FBAR violations, and filing false tax returns. All are looking at a lengthy stay at ClubFed if found guilty.

The saga of the woman who did not give birth to nondecuplets is complete. Via Joe Kristan comes word that Norma Coronel made a plea deal and was ordered to repay the IRS $302,186.

Though the linked story states she gave birth to 20 phony children, earlier reports indicated it was just 19 (with one of them real). I’ll use the smaller number (erring on the side of caution, I suppose) which equates to a repayment of $16,788 per phony child.

As I said when I first reported on this story, claiming something that’s very newsworthy on your tax return that’s false is a sure way to get into trouble. This was truly Bozo.

I’m a resident of Orange County (well, if you read the next post I write…), and I missed the Real Housewife Tax Cheats in Orange County. Luckily, Joe Kristan caught it.

The Orange County Premium Fraud Task Force, a collaboration of investigators from OCDA, DOI, EDD, FTB and the Contractors State License Board investigated the couple for two years and discovered that between 2000 and 2008, they fraudulently submitted 42 claims for uninsured injured workers and underreported $29 million in payroll to SCIF in order to avoid paying Workers’ Compensation Insurance premiums.

Yes, proceeds from illegal income are taxable.

I’ve written about Sharon Kukhahn before. Ms. Kukhahn thought that there was some magical way to decode your IRS file and magically make your taxes disappear! Ms. Kukhahn sold her packages to the public and pocketed $2,000 – $3,000 per sale. As P.T. Barnum said, “There’s one born every minute.”

Back in 2008, the Department of Justice obtained an injunction against her from selling her worthless decoding scheme. (There is no secret IRS file to decode that will make your taxes disappear.) One would think that Ms. Kukhahn would fade into the sunset.

Nope.

In April 2010 Ms. Kukhahn was arrested, charged with conspiracy and tax evasion. Not only did Ms. Kukhahn allegedly promote phony tax schemes, she also supposedly orchestrated a letter writing campaign to stop the IRS from collecting taxes.

Ms. Kukhahn was found guilty back in May. Ms. Kukhahn supposedly used the proceeds from her scheme to buy a yacht and other worldly goods; meanwhile, many of her clients are suffering under tax debts they’ll never be able to repay.

Sentencing is set for Wednesday.

Now, if you really want a decoder ring, here’s an offer from nearly 60 years ago that (at the time) would get you one. It wouldn’t have removed your taxes, but it was a decoder ring:

Saku Koivu is a center for the Anaheim Ducks (they won in Minnesota last night,) and is a resident of Quebec. In September 2009 he received a tax refund of $140,899.04 from Quebec (Mr. Koivu used to play for the Montreal Canadiens). And that’s where the fun begins.

Someone stole that check from Mr. Koivu. That’s the first theft. That thief is unknown.

The person who stole the check goes to Go-Remit, a check cashing business in Côte-des-Neiges, Quebec. The former owner, David Nowak, thinks he’s dealing with an authorized agent of Mr. Koivu (the thief also has identity documents) and will cash the check. But he doesn’t keep $135,000 in his store, so he uses a third-party vendor to get the funds. He picks them up, and keeps them in a paper bag under the back seat of his car.

You’re a step ahead of me, right? Someone stole the bag containing the $135,000. That thief, too, hasn’t been found.

Meanwhile, what is Mr. Nowak to do? He decides to take small amounts from some of his clients to make up the $135,000.

Mr. Nowak’s fraud is discovered by the police after some of his clients think something is wrong. Mr. Nowak pleads guilty but gets a very lenient sentence of time served due to the unusual circumstances of the crime. He also is on probation for two years.

And I’ve only summarized the twists and turns of fate that move through this story.

News Story: La Presse (French)
Summary: Puck Daddy

There’s a new theory in the world of tax fraud promoters: Redemption. Joe Kristan had a post last week on some Kansas City fraudsters who used this method. The “idea” behind this is (as best as I can determine) that the federal government is holding money for you and all you have to do is send in various paperwork to get it.

The fraud in question was not confined to Kansas City. From Detroit comes the news of Diamond Tax Services. Damian Jackson, his wife Holly, and Tammy Daniels, are accused of promoting a tax fraud scheme. Mr. Jackson, a minister at a Detroit area church, used phony Form 1099-OID to obtain over $1.6 million in fraudulent refunds. The Department of Justice has asked a federal court to issue an injunction barring the three from preparing federal tax returns to others.

There may be a criminal prosecution in their future, too. The press release accuses the Jacksons of claiming $2.5 million in phony refunds on their tax returns. Those kinds of numbers tend to get IRS criminal investigation quite interested.

Jay Vincent was a standout player at Michigan State. He was part of the squad that featured Ervin “Magic” Johnson that won the NCAA Championship over Indiana State in 1979. Mr. Vincent played in the NBA with stops in Dallas, Washington, San Antonio, Denver, Philadelphia, and Los Angeles.

Unfortunately, Mr. Vincent’s occupation after the NBA appears to be on the dark side, so to speak. Mr. Vicnent operated a business that did home inspections on foreclosed properties. That would seem like a good business in this economy. Unfortunately, he forgot a necessary step: hiring home inspectors. But Mr. Vincent did take his customers’ payments, but they didn’t get anything in return. That’s fraud. Mr. Vincent also didn’t pay tax on the income from the fraud. He pleaded guilty earlier this year and was sentenced last week to 68 months at ClubFed on the fraud charge and 3 years on the tax fraud charge (to be served concurrently).

Mr. Vincent is also facing possible indictment on another alleged scam. In Indiana, Mr. Vincent advertised tryouts for an exhibition basketball team. The team apparently didn’t exist. His advertisements were allegedly paid for with bad checks. This doesn’t look good for Mr. Vincent

We’ve written about Thomas Parenteau before. His trial was straight out of a cheap novel: He was accused of tax fraud and money laundering while living in a 30,000 square foot mansion with his wife and his mistress. Last year, he was found guilty on 11 of 13 counts. Yesterday, Mr. Parenteau received 22 years at ClubFed for his crimes.

Joe Kristan and TaxDood have more.

Well, back in December of 2002 a woman named Norma Coronel allegedly gave birth to nineteen children. I never heard of this, and with the birth supposedly happening in nearby Los Angeles, I’m certain that a woman giving birth to 19 children would have made the news. (Yes, nondecuplets would be having 19 children at once.)

Ms. Coronel allegedly put down all 19 of her “children” on her tax return. The IRS was skeptical. Perhaps it’s the fact that the largest number of live births at once (with all the children surviving) is eight. Perhaps it was the 18 supposedly phony social security numbers. (Ms. Coronel did give birth to a son in December of 2002.)

No matter, the IRS and Social Security Administration investigated, and Ms. Coronel has been arrested and charged with 35 counts of filing false tax returns, using Social Security numbers fraudulently, and theft. She faces a maximum of 143 years in prison and fines of up to $5.6 million.

This is perhaps one of the most Bozo tax fraud cases I’ve ever read.

Nick Holquin, Jr. was a tax preparer in San Jose. He decided to invest in a Mississippi land development project. When the economy tanked, the project did, too.

Mr. Holquin was able to get twelve individuals to loan him money for this project. Unfortunately, he neglected to tell them about his bankruptcies. His attorney, Dennis Lempert, told the San Jose Mercury that he should have disclosed the one bankruptcy he was aware of. Trouble is, there were at least four others.

He also told clients he was a CPA. He wasn’t.

And the topper was that he neglected to file his own state tax returns…for the last 20 years.

Back in March Mr. Holquin pleaded no contest to tax evasion and fraud. He was sentenced on August 4th to 44 months in prison plus he must make total restitution to the fraud victims and the Franchise Tax Board of over $1.4 million.